Kuwait Companies Law sets clear rules on how profits and losses must be distributed among partners. By default, all partners share profits and losses in proportion to their share in the company's capital (Article 18). If the Company Contract does not specify a particular partner's share of profits or losses, it will automatically be calculated based on their capital contribution.
Importantly, the law prohibits arrangements that exclude any partner entirely from profits or that exempt any partner entirely from losses — such clauses would be considered invalid (Article 18). For partners who contribute labour rather than capital, if their share of profits and losses is not defined in the contract, they have the right to request a formal valuation of their labour contribution to determine a fair share (Article 19).
A critical warning for expat business owners: the law strictly prohibits the distribution of fictitious (non-existent) profits. If false profits are distributed, the company's creditors can demand repayment from both the partners and anyone else who received those distributions — even if they were unaware the profits were fictitious (Article 20). Always ensure your company's financials are accurately reported before any profit distributions are made.
This is general legal information, not legal advice. For advice on your specific situation, consult a lawyer licensed in Kuwait.